Indemnity and Liability Clause Pack - California

INDEMNITY AND LIABILITY CLAUSE PACK — CALIFORNIA

Jurisdiction: State of California
Governing Law: California Codes; California common law
Template Version: 2026-02-26

TABLE OF CONTENTS

• PART I: Legal Framework
• PART II: Corporate Indemnification Clauses
• PART III: Contractual Indemnity Clause Pack
• PART IV: Limitation of Liability Clauses
• PART V: Anti-Indemnity Considerations
• PART VI: Insurance Requirements
• PART VII: California-Specific Practice Notes
• Sources and References

PART I: LEGAL FRAMEWORK

1.1 California Corporate Indemnification Statute

California corporate indemnification is governed by California Corporations Code § 317, a single comprehensive statute that addresses permissive indemnification, mandatory indemnification, authorization procedures, and insurance. Section 317 differs in certain respects from the Revised Model Business Corporation Act framework.

Key features of Cal. Corp. Code § 317:

• Permissive indemnification — third-party actions (§ 317(b)): A corporation has the power to indemnify any person who was or is a party, or is threatened to be made a party, to any proceeding (other than an action by or in the right of the corporation) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with the proceeding, if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation, and in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful.

• Permissive indemnification — derivative actions (§ 317(c)): A corporation has the power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was an agent of the corporation, against expenses actually and reasonably incurred in connection with the defense or settlement of the action, if the person acted in good faith and in a manner the person believed to be in the best interests of the corporation and its shareholders. No indemnification is permitted for amounts paid in settling or otherwise disposing of a pending action, or for expenses incurred in defending a pending action settled or otherwise disposed of, without court approval. No indemnification is permitted if the person has been adjudged liable to the corporation in the performance of that person's duty, unless a court determines the person is entitled to indemnification in view of all the circumstances.

• Mandatory indemnification (§ 317(d)): To the extent that an agent of a corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c), or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred in connection therewith.

• Authorization requirement (§ 317(e)): Except for mandatory indemnification under subdivision (d), indemnification shall be made by the corporation only if authorized in the specific case by: (1) a majority vote of a quorum consisting of directors who are not parties to the proceeding; (2) if such a quorum is not obtainable, independent legal counsel in a written opinion; (3) approval of the shareholders with the shares owned by the person to be indemnified not being entitled to vote; or (4) the court in which the proceeding is or was pending.

• Advancement of expenses (§ 317(f)): Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the agent to repay the amount unless it is ultimately determined that the agent is entitled to be indemnified.

• Insurance (§ 317(i)): A corporation has the power to purchase and maintain insurance on behalf of any agent against any liability asserted against or incurred by the agent, whether or not the corporation would have the power to indemnify the agent against that liability under Section 317.

• Broader rights permitted (§ 317(g)): The provisions of Section 317 do not affect the rights of any agent under any written agreement or the right of the corporation to provide additional indemnification to its agents, provided that no provision made by the corporation may provide indemnification for acts or omissions involving intentional misconduct or a knowing and culpable violation of law, or for acts or omissions committed in a transaction from which an agent derived an improper personal benefit, or for acts or omissions that constitute an unexcused pattern of inattention amounting to an abdication of duty, or for treachery or its legal equivalent, or for acts or omissions with respect to which the corporation is prohibited from providing indemnification.

1.2 Common Law Indemnity in California

California recognizes several forms of implied indemnity under common law:

• Equitable indemnity (comparative indemnity): Under the comparative indemnity doctrine (Li v. Yellow Cab Co., 13 Cal.3d 804 (1975); American Motorcycle Assn. v. Superior Court, 20 Cal.3d 578 (1978)), a tortfeasor may seek partial or total indemnity from a concurrent tortfeasor based on the relative fault of each.
• Implied contractual indemnity: Arises from the contractual relationship between the parties.
• Equitable subrogation: A party who has paid a loss may be subrogated to the rights of the party who suffered the loss.

1.3 Contractual Indemnity Under California Law

California enforces contractual indemnity provisions subject to important limitations:

• Cal. Civ. Code § 1668: Contracts that have for their object, directly or indirectly, to exempt a party from responsibility for fraud, willful injury, or violation of law, whether willful or negligent, are against public policy.
• Crawford v. Weather Shield Mfg., Inc., 44 Cal.4th 541 (2008): Distinguished between the duty to indemnify (which depends on ultimate fault) and the duty to defend (an immediate obligation triggered by tender of a claim within the scope of the indemnity agreement). An express indemnity agreement that encompasses claims of the indemnitee's negligence creates an immediate duty to defend.
• Construction contracts: Subject to the anti-indemnity provisions of Cal. Civ. Code §§ 2782, 2782.05, and 2782.8.

PART II: CORPORATE INDEMNIFICATION CLAUSES

2.1 Mandatory Indemnification Provision

CLAUSE 2.1 — MANDATORY INDEMNIFICATION

The Corporation shall indemnify each person who was or is a party to, or is threatened to be made a party to, any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (including any action by or in the right of the Corporation), by reason of the fact that such person is or was an agent of the Corporation (as the term "agent" is defined in Cal. Corp. Code § 317(a)), to the fullest extent permitted by Cal. Corp. Code § 317, as the same exists or may hereafter be amended, against expenses (including attorney fees), judgments, fines, settlements, and other amounts actually and reasonably incurred by such person in connection with such action, suit, or proceeding.

Mandatory Component (§ 317(d)): To the extent that an agent of the Corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c) of Section 317, or in defense of any claim, issue, or matter therein, such agent shall be indemnified by the Corporation against expenses actually and reasonably incurred in connection therewith, without the necessity of any authorization under subdivision (e).

Limitation (§ 317(g)): Notwithstanding the foregoing, the Corporation shall not provide indemnification for any of the following: (i) acts or omissions involving intentional misconduct or a knowing and culpable violation of law; (ii) acts or omissions committed in a transaction from which the agent derived an improper personal benefit; (iii) acts or omissions that constitute an unexcused pattern of inattention amounting to an abdication of duty; or (iv) acts or omissions as to which indemnification is prohibited by applicable law.

2.2 Permissive Indemnification Resolution

CLAUSE 2.2 — BOARD RESOLUTION FOR PERMISSIVE INDEMNIFICATION

RESOLVED, that the Corporation shall indemnify [________________________________] ("Indemnitee") against expenses, judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with [________________________________] (the "Proceeding"), subject to the following:

(a) The required authorization has been obtained under Cal. Corp. Code § 317(e) by:

☐ A majority vote of a quorum of directors who are not parties to the Proceeding

☐ Independent legal counsel in a written opinion (if the required quorum is not obtainable)

☐ Approval of the shareholders (with shares owned by the Indemnitee not entitled to vote)

☐ The court in which the Proceeding is or was pending

(b) For third-party proceedings (§ 317(b)): Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the Corporation, and in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful.

(c) For derivative proceedings (§ 317(c)): Indemnitee acted in good faith and in a manner Indemnitee believed to be in the best interests of the Corporation and its shareholders. No indemnification for amounts paid in settlement without court approval.

2.3 Advancement of Expenses

CLAUSE 2.3 — ADVANCEMENT OF EXPENSES

The Corporation shall advance expenses (including attorney fees) incurred by an agent of the Corporation in defending any civil, criminal, administrative, or investigative action, suit, or proceeding prior to the final disposition of such action, suit, or proceeding, pursuant to Cal. Corp. Code § 317(f), upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall ultimately be determined that the agent is entitled to be indemnified as authorized in Section 317.

The Board of Directors may, in its discretion, upon approving the advancement of expenses, require security for the undertaking.

2.4 Directors and Officers Insurance

CLAUSE 2.4 — D&O INSURANCE AUTHORIZATION

Pursuant to Cal. Corp. Code § 317(i), the Corporation shall purchase and maintain insurance on behalf of any agent of the Corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent's status as such, whether or not the Corporation would have the power to indemnify the agent against such liability under Cal. Corp. Code § 317.

Minimum Coverage Parameters:

☐ Each-occurrence limit: $[________________________________]

☐ Annual aggregate limit: $[________________________________]

☐ Retention/deductible: $[________________________________]

☐ Policy form: ☐ Claims-made ☐ Occurrence

☐ Tail coverage period (if claims-made): [____] years

2.5 Indemnification Agreement (Individual)

CLAUSE 2.5 — INDEMNIFICATION AGREEMENT

The Corporation is authorized to enter into indemnification agreements with any or all of its directors, officers, employees, or other agents, providing for indemnification and advancement of expenses to the fullest extent permitted by Cal. Corp. Code § 317, subject to the limitations set forth in § 317(g). Such agreements may provide for rights in addition to those provided by the Corporation's Articles of Incorporation and Bylaws, provided that no such agreement shall provide indemnification for acts or omissions prohibited by § 317(g).

PART III: CONTRACTUAL INDEMNITY CLAUSE PACK

3.1 Mutual Indemnification (Balanced)

CLAUSE 3.1 — MUTUAL INDEMNIFICATION

Each party (when acting as the "Indemnifying Party") shall indemnify, defend, and hold harmless the other party and its officers, directors, employees, agents, successors, and permitted assigns (collectively, the "Indemnified Parties") from and against any and all third-party claims, demands, actions, suits, proceedings, losses, damages, liabilities, judgments, fines, penalties, costs, and expenses (including reasonable attorney fees and court costs) (collectively, "Losses") arising out of or relating to:

(a) Any material breach of any representation, warranty, or obligation of the Indemnifying Party under this Agreement;

(b) The gross negligence or willful misconduct of the Indemnifying Party or its officers, directors, employees, agents, or subcontractors;

(c) Any infringement or misappropriation of any third-party intellectual property right by the Indemnifying Party's materials, products, or services provided under this Agreement; or

(d) Any violation of applicable law by the Indemnifying Party in the performance of its obligations under this Agreement,

in each case, except to the extent such Losses arise from the negligence or willful misconduct of the Indemnified Parties or from the Indemnified Parties' breach of this Agreement.

California Practice Note — Duty to Defend: Under Crawford v. Weather Shield Mfg., Inc., 44 Cal.4th 541 (2008), an express indemnity provision that encompasses claims of the indemnitee's negligence triggers an immediate duty to defend upon proper tender, which is broader than the duty to indemnify. Practitioners should specify whether the indemnification obligation includes a duty to defend as well as a duty to indemnify, and structure the defense obligation accordingly.

3.2 One-Way Indemnification (Provider to Customer)

CLAUSE 3.2 — PROVIDER INDEMNIFICATION OF CUSTOMER

Provider shall indemnify, defend, and hold harmless Customer and its officers, directors, employees, agents, successors, and permitted assigns from and against any and all Losses arising out of or relating to:

(a) Any third-party claim alleging that Customer's authorized use of Provider's products or services infringes, misappropriates, or otherwise violates any patent, copyright, trademark, trade secret, or other intellectual property right of a third party;

(b) Provider's material breach of any representation, warranty, or obligation under this Agreement;

(c) The gross negligence or willful misconduct of Provider, its employees, agents, or subcontractors; or

(d) Provider's violation of applicable law.

Exclusions from Provider's Indemnification Obligation:

Provider's obligations under this Section shall not apply to claims arising from: (i) modifications to Provider's products or services made by Customer without Provider's written approval; (ii) use of Provider's products or services in combination with third-party products, services, or materials not supplied or approved by Provider; (iii) Customer's use of Provider's products or services in violation of this Agreement or applicable law; or (iv) Customer's continued use after being notified of the alleged infringement and provided a non-infringing alternative.

Mitigation Remedies: If any product or service becomes, or in Provider's reasonable opinion is likely to become, the subject of an infringement claim, Provider may, at its sole option and expense: (1) procure for Customer the right to continue using the affected product or service; (2) replace or modify the affected product or service to make it non-infringing without material degradation in functionality; or (3) if neither (1) nor (2) is commercially practicable, terminate the affected product or service and refund to Customer any prepaid, unused fees.

3.3 Customer Indemnification (Customer to Provider)

CLAUSE 3.3 — CUSTOMER INDEMNIFICATION OF PROVIDER

Customer shall indemnify, defend, and hold harmless Provider and its officers, directors, employees, agents, successors, and permitted assigns from and against any and all Losses arising out of or relating to:

(a) Any third-party claim arising from Customer Data, including but not limited to claims of defamation, invasion of privacy, or infringement of intellectual property rights;

(b) Customer's use of Provider's products or services in violation of applicable law or this Agreement;

(c) Customer's use of Provider's products or services in combination with third-party systems, products, or materials not supplied or approved by Provider, to the extent such combination gives rise to the claim; or

(d) Customer's gross negligence or willful misconduct.

3.4 Third-Party Claims Procedure

CLAUSE 3.4 — THIRD-PARTY CLAIMS PROCEDURE

(a) Notice. The Indemnified Party shall promptly notify the Indemnifying Party in writing of any third-party claim for which indemnification is sought (a "Claim Notice"). The Claim Notice shall describe the claim in reasonable detail and include copies of relevant pleadings, correspondence, or documents. The failure to provide prompt notice shall not relieve the Indemnifying Party of its indemnification obligations except to the extent the Indemnifying Party is materially prejudiced by such failure.

(b) Defense. The Indemnifying Party shall have the right, at its sole cost and expense, to assume and control the defense of any claim for which it is obligated to provide indemnification, using counsel of its own choosing reasonably acceptable to the Indemnified Party. Upon proper tender, the Indemnifying Party's duty to defend shall be an immediate obligation, separate from and broader than the duty to indemnify (per Crawford v. Weather Shield Mfg., Inc., 44 Cal.4th 541 (2008)).

(c) Participation. The Indemnified Party may participate in the defense of any claim with its own counsel and at its own expense; provided, however, that if the Indemnifying Party fails to assume the defense within [____] business days after receiving the Claim Notice, or if a conflict of interest makes it inappropriate for the same counsel to represent both parties, the Indemnified Party may assume the defense at the Indemnifying Party's expense.

(d) Settlement. The Indemnifying Party shall not settle any claim without the Indemnified Party's prior written consent (not to be unreasonably withheld, conditioned, or delayed) if the settlement: (i) imposes any non-monetary obligation on, or requires any admission of liability by, the Indemnified Party; (ii) does not include a complete and unconditional release of the Indemnified Party; or (iii) involves the payment of money for which the Indemnified Party will not be fully indemnified.

(e) Cooperation. The Indemnified Party shall make available to the Indemnifying Party all relevant records, documents, and information in its possession or control, and shall provide reasonable assistance and cooperation, at the Indemnifying Party's expense.

3.5 Direct Claims Between Parties

CLAUSE 3.5 — DIRECT CLAIMS PROCEDURE

(a) Notice. In the event of a direct claim, the Indemnified Party shall deliver a written notice to the Indemnifying Party specifying: (i) the nature of the claim in reasonable detail; (ii) the specific provisions of this Agreement alleged to have been breached; and (iii) the estimated amount of Losses incurred or expected to be incurred.

(b) Response. The Indemnifying Party shall respond within [____] business days, either accepting the claim (in whole or in part), rejecting the claim, or requesting additional information.

(c) Resolution. If the parties cannot resolve the direct claim within [____] business days after the Indemnifying Party's response, either party may pursue resolution through the dispute resolution mechanisms set forth in this Agreement.

PART IV: LIMITATION OF LIABILITY CLAUSES

4.1 Consequential Damages Exclusion

CLAUSE 4.1 — EXCLUSION OF CONSEQUENTIAL DAMAGES

EXCEPT FOR THE EXCLUDED CLAIMS SET FORTH IN SECTION 4.3 BELOW, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF BUSINESS OPPORTUNITIES, BUSINESS INTERRUPTION, LOSS OF DATA, LOSS OF GOODWILL, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR ANY OTHER SIMILAR DAMAGES, ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL THEORY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND EVEN IF A LIMITED REMEDY SET FORTH HEREIN IS FOUND TO HAVE FAILED OF ITS ESSENTIAL PURPOSE.

California Practice Note: California courts generally enforce consequential damages waivers in commercial contracts between sophisticated parties. However, under Cal. Civ. Code § 1668, contracts that exempt a party from responsibility for fraud, willful injury, or violation of law (whether willful or negligent) are against public policy. Under Cal. Com. Code § 2719(3) (UCC), limitation of consequential damages for personal injury in consumer goods cases is prima facie unconscionable.

4.2 Cap on Aggregate Liability

CLAUSE 4.2 — AGGREGATE LIABILITY CAP

EXCEPT FOR THE EXCLUDED CLAIMS SET FORTH IN SECTION 4.3 BELOW, EACH PARTY'S TOTAL CUMULATIVE LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL THEORY, SHALL NOT EXCEED:

☐ Option A (Fee-Based Cap): The aggregate amount of fees actually paid or payable by Customer to Provider during the [____]-month period immediately preceding the first event giving rise to such liability.

☐ Option B (Fixed-Dollar Cap): $[________________________________].

☐ Option C (Greater-Of Cap): The greater of (i) the aggregate amount of fees actually paid or payable by Customer to Provider during the [____]-month period immediately preceding the first event giving rise to such liability, or (ii) $[________________________________].

4.3 Carve-Outs from Liability Limitations

CLAUSE 4.3 — EXCLUDED CLAIMS

The limitations of liability set forth in Sections 4.1 and 4.2 shall not apply to (collectively, "Excluded Claims"):

(a) Either party's indemnification obligations for third-party intellectual property infringement claims;

(b) Either party's liability arising from gross negligence or willful misconduct;

(c) Either party's liability arising from a breach of its confidentiality obligations under this Agreement;

(d) Either party's liability arising from a data breach caused by such party's failure to maintain agreed-upon security controls;

(e) Customer's obligation to pay fees due and payable under this Agreement;

(f) Either party's liability arising from fraud, willful injury, or violation of law (per Cal. Civ. Code § 1668);

(g) Either party's liability arising from bodily injury, death, or damage to tangible property; and

(h) Any liability that cannot be limited or excluded as a matter of California law.

Optional Supercap for Excluded Claims:

☐ Notwithstanding the foregoing, each party's total cumulative liability for Excluded Claims (other than items (f) and (g)) shall not exceed [____] times the liability cap set forth in Section 4.2 (or $[________________________________], whichever is greater).

4.4 Enforceability Under California Law

CLAUSE 4.4 — ENFORCEABILITY SAVINGS PROVISION

The parties acknowledge that the limitations of liability and exclusions of damages set forth in this Agreement reflect a fair and reasonable allocation of risk between the parties and are a material inducement for each party to enter into this Agreement. If any limitation or exclusion is found to be unenforceable under California law, it shall be reformed to the minimum extent necessary to make it enforceable.

California Enforceability Notes:

• Cal. Civ. Code § 1668: Contracts exempting a party from responsibility for fraud, willful injury, or violation of law (willful or negligent) are against public policy. This prohibition cannot be waived by contract.
• Tunkl v. Regents of University of California, 60 Cal.2d 92 (1963): Exculpatory clauses in contracts involving a public interest (e.g., medical services, common carriers, public utilities, banking) may be unenforceable.
• California follows a pure comparative fault system under Li v. Yellow Cab Co., which affects allocation of liability.
• Proposition 51 (Cal. Civ. Code § 1431.2): Each defendant is liable for noneconomic damages only in proportion to that defendant's percentage of fault. Joint and several liability applies only to economic damages.

PART V: ANTI-INDEMNITY CONSIDERATIONS

5.1 General Construction Anti-Indemnity Statute (Cal. Civ. Code § 2782)

California has one of the most complex anti-indemnity frameworks in the nation, with multiple provisions targeting different types of construction contracts.

Cal. Civ. Code § 2782(a) — General Rule (All Construction Contracts):

Provisions in any construction contract that purport to indemnify the promisee against liability for damages for death or bodily injury to persons, injury to property, or any other loss, damage, or expense arising from the sole negligence or willful misconduct of the promisee or the promisee's agents, servants, or independent contractors who are directly responsible to the promisee, are against public policy and are void and unenforceable.

Cal. Civ. Code § 2782(b) — Public Agency Contracts (entered into on or after January 1, 2013):

Provisions in any construction contract with a public agency that purport to impose on any contractor, subcontractor, or supplier of goods or services liability for the active negligence of the public agency are void and unenforceable. Additionally, all contracts with a public agency for design professional services entered into on or after January 1, 2013, must contain a provision indicating the public agency's agreement to indemnify the design professional to the extent the claims arise from the negligence, recklessness, or willful misconduct of the public agency.

Cal. Civ. Code § 2782(c) — Private Owner Contracts (entered into on or after January 1, 2013):

For contracts with the owner of privately owned real property to be improved, provisions that purport to impose on any contractor, subcontractor, or supplier of goods or services liability are unenforceable to the extent of the active negligence of the owner, including that of its employees.

5.2 Subcontractor Protections (Cal. Civ. Code § 2782.05)

Contracts entered into on or after January 1, 2013:

Provisions in construction contracts that purport to insure or indemnify a general contractor, construction manager, or other subcontractor by a subcontractor are void and unenforceable to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of that general contractor, construction manager, or other subcontractor or their agents, employees, or independent contractors.

Exceptions (§ 2782.05(b)): This section does not apply to contracts for: (1) original residential construction of single-family dwellings; (2) a direct contract with a public agency; (3) wrap-up insurance policies or similar consolidated insurance programs; and ten other specific exceptions.

5.3 Design Professional Protections (Cal. Civ. Code § 2782.8)

Provisions in all contracts for design professional services that purport to require the design professional to defend the indemnitee are void and unenforceable. Design professionals may only be required to indemnify to the extent of their own negligence, recklessness, or willful misconduct.

5.4 Construction Contract Indemnity Clause (California-Compliant)

CLAUSE 5.4 — CONSTRUCTION INDEMNITY (COMPLIANT WITH CAL. CIV. CODE §§ 2782, 2782.05)

For General Commercial Construction (Post-2013):

To the fullest extent permitted by law, including but not limited to Cal. Civ. Code §§ 2782 and 2782.05, Contractor shall indemnify, defend, and hold harmless Owner and its officers, directors, employees, and agents from and against any and all Losses arising out of or relating to:

(a) Bodily injury (including death) to any person;

(b) Damage to property (including loss of use thereof); or

(c) Any other loss, damage, or expense,

caused by or arising out of the negligent acts, errors, or omissions of Contractor, its subcontractors, agents, or employees in the performance of the Work, but not to the extent arising from the active negligence, sole negligence, or willful misconduct of Owner, its officers, directors, employees, or agents.

For Subcontractor Agreements (Post-2013):

To the fullest extent permitted by law, including but not limited to Cal. Civ. Code § 2782.05, Subcontractor shall indemnify, defend, and hold harmless General Contractor and its officers, directors, employees, and agents from and against any and all Losses arising out of or relating to bodily injury (including death), property damage, or any other loss, damage, or expense, caused by or arising out of the negligent acts, errors, or omissions of Subcontractor, its sub-subcontractors, agents, or employees, but not to the extent arising from the active negligence or willful misconduct of General Contractor, its officers, directors, employees, or agents.

For Design Professional Services:

To the fullest extent permitted by Cal. Civ. Code § 2782.8, Design Professional shall indemnify and hold harmless Client from and against any and all Losses to the extent caused by the negligence, recklessness, or willful misconduct of Design Professional, its subconsultants, agents, or employees. This indemnification obligation does not include a duty to defend.

5.5 Type I, Type II, and Type III Indemnity (California Practice)

California practitioners commonly classify indemnity provisions in construction contracts by type:

• Type I (Broad Form — VOID under § 2782): Indemnification for all liability, including the indemnitee's sole negligence. Void and unenforceable.
• Type II (Intermediate Form): Indemnification for all liability except the indemnitee's sole negligence. Under § 2782(c) and § 2782.05, void to the extent of the indemnitee's active negligence for contracts entered into on or after January 1, 2013.
• Type III (Limited/Comparative Form — RECOMMENDED): Indemnification only to the extent of the indemnitor's own negligence. Enforceable under California law.

PART VI: INSURANCE REQUIREMENTS

6.1 General Insurance Requirements

CLAUSE 6.1 — INSURANCE REQUIREMENTS

[________________________________] ("Insured Party") shall, at its sole cost and expense, obtain and maintain throughout the term of this Agreement, and for a period of [____] years thereafter, the following insurance coverages with carriers admitted to do business in California and rated no less than "A-" (VII) by A.M. Best Company:

(a) Commercial General Liability Insurance:

☐ Each-occurrence limit: $[________________________________]

☐ General aggregate limit: $[________________________________]

☐ Products-completed operations aggregate: $[________________________________]

☐ Personal and advertising injury: $[________________________________]

Coverage shall include premises-operations, products-completed operations, contractual liability (including coverage for the indemnification obligations assumed under this Agreement), broad form property damage, and independent contractors.

(b) Professional Liability (Errors and Omissions) Insurance:

☐ Each-claim limit: $[________________________________]

☐ Annual aggregate limit: $[________________________________]

☐ Retroactive date: No later than [__/__/____]

(c) Workers' Compensation and Employers' Liability Insurance:

☐ Workers' Compensation: Statutory limits as required by California Labor Code § 3700 et seq.

☐ Employers' Liability:
- Each accident: $[________________________________]
- Disease — policy limit: $[________________________________]
- Disease — each employee: $[________________________________]

(d) Commercial Automobile Liability Insurance:

☐ Combined single limit: $[________________________________]

Coverage shall include owned, hired, and non-owned vehicles.

(e) Umbrella/Excess Liability Insurance:

☐ Each-occurrence limit: $[________________________________]

☐ Annual aggregate limit: $[________________________________]

(f) Cyber Liability / Technology Errors and Omissions (if applicable):

☐ Each-claim limit: $[________________________________]

☐ Annual aggregate limit: $[________________________________]

6.2 Additional Insured Requirements

CLAUSE 6.2 — ADDITIONAL INSURED

[________________________________] ("Additional Insured") shall be named as an additional insured on all commercial general liability, commercial automobile liability, and umbrella/excess liability insurance policies maintained by [________________________________] ("Named Insured") under this Agreement, using ISO Additional Insured endorsement CG 20 10 (or equivalent) for ongoing operations and CG 20 37 (or equivalent) for completed operations.

The additional insured coverage shall:

(a) Be primary and non-contributory with respect to any other insurance or self-insurance maintained by the Additional Insured;

(b) Apply on a per-project basis, where applicable;

(c) Include a waiver of subrogation in favor of the Additional Insured; and

(d) Not be limited by any limitation of liability set forth in this Agreement.

6.3 Waiver of Subrogation

CLAUSE 6.3 — WAIVER OF SUBROGATION

Each party shall cause its insurers to waive all rights of subrogation against the other party and its officers, directors, employees, and agents with respect to any claims covered by the insurance policies required under this Agreement.

6.4 Certificates of Insurance

CLAUSE 6.4 — CERTIFICATES AND EVIDENCE OF INSURANCE

[________________________________] shall deliver to [________________________________] certificates of insurance evidencing all required coverages prior to the commencement of any work or services under this Agreement, and annually thereafter upon renewal. Certificates shall:

(a) Identify the named insured, policy numbers, policy periods, and coverage limits;

(b) Confirm additional insured status, waiver of subrogation, and primary/non-contributory status;

(c) Provide that the insurer shall endeavor to provide [____] days' prior written notice to the certificate holder of any cancellation, non-renewal, or material change in coverage; and

(d) Be accompanied by copies of all required endorsements upon request.

PART VII: CALIFORNIA-SPECIFIC PRACTICE NOTES

7.1 Comparative Fault and Proposition 51

California follows a pure comparative fault system (Li v. Yellow Cab Co., 13 Cal.3d 804 (1975)). Under Proposition 51 (Cal. Civ. Code § 1431.2):

• Economic damages: Joint and several liability applies. A plaintiff may recover the full amount of economic damages from any defendant.
• Noneconomic damages: Each defendant is liable only for the proportion of noneconomic damages that corresponds to that defendant's percentage of fault (several liability only).
• Contractual indemnification provisions can shift economic risk beyond what tort law would impose.

7.2 Duty to Defend vs. Duty to Indemnify

Under Crawford v. Weather Shield Mfg., Inc., 44 Cal.4th 541 (2008):

• The duty to defend is an immediate obligation triggered by proper tender of a potentially covered claim.
• The duty to indemnify is determined after the underlying facts are established.
• An express indemnity agreement that encompasses claims of the indemnitee's negligence creates an immediate duty to defend.
• Practitioners should clearly define whether the indemnification obligation includes a duty to defend in addition to a duty to indemnify.

7.3 Statute of Limitations Considerations

• Written contract claims: Four (4) years (Cal. Code Civ. Proc. § 337)
• Oral contract claims: Two (2) years (Cal. Code Civ. Proc. § 339)
• Tort claims (general): Two (2) years (Cal. Code Civ. Proc. § 335.1)
• Construction defect (patent deficiency): Four (4) years after substantial completion (Cal. Code Civ. Proc. § 337.1)
• Construction defect (latent deficiency): Ten (10) years after substantial completion as the statute of repose (Cal. Code Civ. Proc. § 337.15)
• Indemnity claims: The statute of limitations for an indemnity claim generally accrues when the indemnitee suffers actual loss (e.g., payment of a judgment or settlement).

7.4 Jury Waiver Enforceability

The California Constitution (Art. I, § 16) guarantees the right to trial by jury. California courts are generally hostile to pre-dispute jury waivers and may refuse to enforce them. The California Supreme Court has not definitively ruled on the enforceability of pre-dispute jury waivers in commercial contracts. Practitioners should consider:

☐ Mandatory arbitration as a more enforceable alternative to jury waiver

☐ If including a jury waiver, ensure it is conspicuous, mutual, and supported by evidence of knowing and voluntary consent

7.5 Drafting Checklist

☐ Verify that all construction contract indemnification provisions comply with Cal. Civ. Code §§ 2782, 2782.05, and 2782.8

☐ Distinguish between public and private construction projects and subcontractor relationships

☐ Ensure design professional indemnification does not include a duty to defend (prohibited by § 2782.8)

☐ Classify construction indemnity as Type III (comparative) to ensure enforceability

☐ Address the duty to defend separately from the duty to indemnify per Crawford v. Weather Shield

☐ Verify that corporate indemnification provisions comply with Cal. Corp. Code § 317

☐ Ensure no indemnification is provided for intentional misconduct, knowing violations of law, or improper personal benefit (§ 317(g))

☐ Verify that limitation of liability provisions do not purport to exempt a party from liability for fraud, willful injury, or violation of law (Cal. Civ. Code § 1668)

☐ Consider Proposition 51 when allocating economic vs. noneconomic damages

☐ Verify insurance requirements meet California-specific mandates (Cal. Labor Code § 3700 et seq. for workers' compensation)

☐ Include appropriate survival provisions for post-termination indemnification obligations

☐ Ensure all optional provisions are appropriately selected and all bracketed fields are completed

SOURCES AND REFERENCES

1. Cal. Corp. Code § 317 — Indemnification of Corporate Agents
   - https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CORP&sectionNum=317

2. Cal. Civ. Code § 2782 — Anti-Indemnity (Construction Contracts)
   - https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=2782

3. Cal. Civ. Code § 2782.05 — Anti-Indemnity (Subcontractor Protections)
   - https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=2782.05

4. Cal. Civ. Code § 2782.8 — Anti-Indemnity (Design Professionals)
   - https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=2782.8

5. Cal. Civ. Code § 1668 — Contracts Against Public Policy
   - https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1668

6. Cal. Civ. Code § 1431.2 — Proposition 51 (Several Liability for Noneconomic Damages)
   - https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1431.2

7. Crawford v. Weather Shield Mfg., Inc., 44 Cal.4th 541 (2008) — Duty to defend vs. duty to indemnify in express indemnity

8. Li v. Yellow Cab Co., 13 Cal.3d 804 (1975) — Comparative fault

9. Tunkl v. Regents of University of California, 60 Cal.2d 92 (1963) — Public interest exception to exculpatory clauses

This clause pack is provided for informational purposes only and does not constitute legal advice. It must be reviewed and customized by a qualified attorney licensed in California before use. Laws change frequently; all citations should be verified against current statutes before relying on this document.

Prepared for use on the ezel.ai platform. For solo practitioners licensed in California.